City-commissioned report gives thumbs up to Nordic Aquafarms proposal

Source: Nordic AquafarmsAn artist's rendering of the $150 million salmon farm proposed for construction in Belfast by Nordic Aquafarms.

Belfast — A city-commissioned report came back last week in support of the proposed Nordic Aquafarms salmon farm.

The 18-page report by Deloitte, an international management consulting firm, centers on nine questions posed by city officials, most of which concern the financial viability of a $150-million land-based salmon farm proposed by the Norwegian company earlier this year.

The city asked about the company's reputation in Norway and Denmark, where it operates smaller facilities; the competence of its team; the strength of its investor backing; whether recirculating aquaculture systems could succeed on the scale proposed by Nordic Aquafarms; and whether the facility would appeal to another company if Nordic Aquafarms were to leave Belfast.

While the report notes that the proposed facility is unprecedented, and therefore untested, its conclusions were optimistic.

City Manager Joe Slocum said he was satisfied with the report, which was meant to address concerns that city staff lacked the expertise to answer.

"We spent a lot of time saying someone should go over there and kick the tires," he said. "Finally realized we need to get some independent people."

Slocum said the city has not worked with Deloitte before and said the consultant was chosen in part because it has an office in Oslo, Norway, and was believed to have in-house expertise in aquaculture. The report cost the city $14,000.

The final document relies heavily on sources in the aquaculture business or with a stake in the success of Nordic Aquafarms. A list of 10 interviewees includes four sources from the aquaculture industry; economic development and chamber of commerce directors from Frederickstad, Norway, where Nordic Aquafarms has started construction on a land-based salmon farm; and two sources from DNB Bank of Norway, a major investor in Norwegian aquaculture that has championed the industry through its market analysis arm.

Deloitte also interviewed environmental protection officials from the regions of Norway and Denmark where Nordic Aquafarms operates today.

Slocum said the city focused on financial questions because the viability of the project will be a consideration during the eventual Planning Board review of the project, whereas the environmental permits will be issued by state and federal agencies.

"I'm going to be watching this like everyone else is," he said.

In response to a city question about whether Nordic Aquafarms could raise the $150 million needed for the first phase of its Belfast facility, the Deloitte report notes that Nordic's largest investors are family-owned companies, which "leads us to believe that they have a longer perspective on their involvement compared to other types of investors."

The report goes on to say that banks might be wary of a project being built at an unproven scale using a relatively new technology; however, "there is generally good willingness to invest in seafood companies for the time being, and increasingly more companies target producing fish on land with RAS technology (recirculating aquaculture systems) that has been able to get financing relatively easy."

That includes the Atlantic Sapphire development in Miami, which raised $80 million in a few hours earlier this year, albeit in high-interest private loans, according to the report.

The report paints a rosy picture of the private investment scene, stating that current interest by investors in land-based aquaculture "exemplifies the industry's belief that we will see commercially successful facilities going forward."

The report expresses confidence in the skilled workers Nordic Aquafarms has hired to date but notes that the Norwegian company "will probably need to increase their U.S. capacity in biology."

On community relations, Deloitte reports that the town of Fredrikstad, Norway, was wary at first but warmed to Nordic Aquafarms when the company provided residents "with sufficient and relevant information."

Finally, Deloitte takes CEO Erik Heim's relocation to Maine as an illustration of the company's "dedication."

The report gives less than one page to potential environmental impacts of the proposed facility, which so far have constituted the largest concerns among opponents.

"In general, there are few concerns from an environmental standpoint, although the production itself is less energy efficient than the alternative," the report states. "However, this is somewhat balanced out from reduced transportation needs for fish produced close to the consumers."

"On a general basis, compared with traditional fish farming, we see a relatively lower environmental risk to projects using RAS technology."

The report concludes with a somewhat circular endorsement of the Nordic Aquafarms proposal and the land-based aquaculture industry, saying, in effect that it will be a success, if it succeeds:

"Over the next few years it will be a lot clearer if this technology is a commercial success. The attractiveness for sale is fully dependent on the facilities being proven to be successful from a technological and operational standpoint."

The report acknowledges that large-scale land-based farming of Atlantic salmon beyond the smolt phase is unproven, but says Nordic Aquafarms "holds the necessary experience and competency to professionally initiate land-based salmon farming in City of Belfast, ME."

Slocum anticipated that discussion of the report would be on the agenda of the next City Council meeting Aug. 7.